Not surprisingly, for large oil-producing nations—such as Russia and Venezuela—lower oil prices are creating havoc. But for countries that import a significant amount of their oil, including many countries in Asia, lower oil prices are a boon.
One big beneficiary of lower oil prices is India, which imports roughly 85% of its oil. Cheaper oil prices are helping to lower India’s chronically high inflation rate (now down to 6.5%) and, given large government energy subsidies, aiding the country’s fiscal position. Lower oil prices, coupled with further reforms from the new Modi-led government, helped Indian equities hit an all-time high in October.
Along with recent strength in both China and Japan––also big energy importers––this confirms our view that investors should consider the opportunities in Asian equities.